CHS enters ethanol production for the third time

CHS, Inc. cooperative is entering the ethanol production business for the third time with the purchase of an ethanol plant in Rochelle, Ill.

CHS has “marketed the plant’s ethanol since 2006” when the original plant went on line. The co-op also reportedly announced it is looking to acquire other ethanol plants with an eye toward selling its Cenex-brand gasoline with ethanol from its own production and blending facilities. CHS is also looking at income from dried distiller grains (DDGs) for feed, sale of ethanol to other oil industry blenders and from ethanol export.

The purchase of the Illinois River Energy facility is reported to be a cash deal that should close in June. The facility is listed as having expanded since it opened in 2006 so that today it produces 133 million gallons of ethanol as well as corn oil and DDGs. The purchase of the facility is from Sinav Ltd., a London, England, based company that has owned the plant since 2012.

David Shaffer, reporter for the Minneapolis Star Tribune, wrote about CHS’s earlier ventures into corn ethanol, “In the 1980s, CHS and Archer Daniels Midland Co. owned a small, first-generation ethanol plant in North Dakota, but CHS sold its stake in 1991. Fifteen years later, in 2006, CHS acquired 24 percent of US BioEnergy, which then owned four ethanol plants, but CHS had to write off $74 million of that investment after US BioEnergy merged with VersaSun and the combined company filed for bankruptcy in 2008.”

CHS management and energy analysts are both quoted as being optimistic that this is a wise move compared to the previous two tries by CHS at entering the ethanol production business. The full article can be read by clicking here.